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Private equity firms launch counteroffer for Portugal Telecom

On the heels of Altice’s announced plan to purchase the Portuguese assets of Portugal Telecom (PT) from Oi of Brazil, private equity funds Apax Partners and Bain Capital jointly launched a counteroffer of €7.075 billion (US$8.82 billion) on Wednesday to acquire control of PT.

Disclosed in a filing with Brazil’s securities regulator, the Apax-Bain proposal slightly exceeds the offer of €7.025 billion (US$8.76 billion) forwarded a week ago by Altice, a Luxembourg-based cable operator that agreed earlier this year to purchase French wireless operator SFR. Both bids exclude PT businesses within Africa and PT debt which includes a defaulted €900 million loan to a unit of Portugal’s Banco Espirito Santo (BES). Observers also say both offers include two sets of €400 million deferred payments that are contingent upon the performance of PT assets.

Like the Altice offer, the joint Apax-Bain bid would also unwind a planned merger of Brazilian telecommunications assets announced last December by PT and Oi, the top-ranked provider of landline telecommunications services in Brazil, and proceeds from either sale would enable Oi to pare down its debt load of US$18 billion.